Republicans and Biden agreed on an agreement in principle on the budget last night. There are different versions of the compromise. One bypasses the debt ceiling by agreeing that expenses should only increase by 1 percent. The issue of the debt ceiling is postponed until January 2025, when a new president will be in place.
The budget consists of fixed items and money for “new projects”. Several billion dollars in unused covid funds are being drawn in and it is said that Biden’s debt relief for students is also going down the drain. In that case, it will be a victory for the Speaker of the House, Kevin McCarthy.
The United States would default on its debt obligations on June 5 and the federal government would be without funds.
The media will not deal with the fact that the US is about to sink into debt. It is like having a credit card where the National Assembly, every time the account is overdrawn, gives itself the right to raise the limit. The debt must be serviced and the national debt is about to reach a level where future generations will become debt slaves. Then the superpower status is over. In parallel with this, the dollar risks losing its status as an international means of payment.
Polls show that 60 percent of voters were willing to hit the debt ceiling and risk federal layoffs to achieve budget cuts. Biden’s election campaign is going badly, and that may have contributed to his willingness to compromise.